Part of Petitions – in the House of Commons at 10:44 am on 20 December 1991.
Edward Leigh
Parliamentary Under-Secretary (Department of Trade and Industry)
10:44,
20 December 1991
I can assure the hon. Lady that the Secretary of State has met the chairman of Vickers and is pursuing the matter with great vigour. She knows that our regional office has done a considerable amount of work. Mr. John Pownall, regional director of the Department of Trade and Industry in the north-west, has had a series of meetings with the Crewe development agency. At the most recent meeting, on 25 November. we offered the agency £40,000 of matching grants to meet half the costs of two projects, to help to develop a strategy for technology transfer and a business in the environment programme for firms in the borough. I hope that the hon. Lady accepts that the Department of Trade and Industry is taking steps to help. I am happy to visit her Constituency to meet the borough council with her. It is most important that Department of Trade and Industry Ministers do not spend all their time in London, important though our responsibilities to the House are, but travel around the country, as I do almost every day of the week. I hope that that commitment will help the hon. Lady. I have already visited the works, but if I were invited I should be delighted to visit again.
Rolls-Royce is the last significant domestic car maker wholly owned by British interests and it is therefore right that the whole House should follow developments closely. Vickers acquired the company for £35 million in 1980. It was floated in 1973 after the collapse of its then parent aero-engine maker in 1971. City estimates of its current value vary between £250 million and £600 million. In the following 10 years, investment proved profitable and as late as last year—it is important to make this point, because it puts the debate in perspective—it made nearly one third of Vickers' £100 million profits. With the collapse of sales, in 1991 it will make an estimated loss of £60 million. Its problems are serious, but we hope that the parent company, Vickers, has the resources to overcome the problem; it is clearly seeking to do so.
A brief look at what has happened in the United States is a good, if unhappy, illustration of what Rolls-Royce faces. In a typical year, almost half the cars that it produces are exported to that country. In 1990, it assembled a total of 3,300 cars and, as usual, about 50 per cent. were exported to the United States. Compared with last year, sales in the United States have fallen by half this year. Overall, it seems that this year's total sales for Rolls-Royce cars will be some 50 per cent. lower than in 1990.
I hope that hon. Members will join me in understanding the difficult market conditions that all luxury car makers are facing and the need for them to take positive but difficult steps to secure their future. In the markedly changed circumstances in which Rolls-Royce Motor Cars finds itself, the company has been taking urgent and sometimes painful decisions to restructure its manufacturing operations and to bring costs into line with the new and much lower level of sales.
As the representative of the factory's workers, the hon. Lady dealt with the issue of job losses, which of course are regrettable at any time. I appreciate hon. Members' concern for the employment prospects of Rolls-Royce's work force at Crewe, but manning is a matter for the commercial judgment of the company and it would be counterproductive for the Government to try to intervene in the normal commercial processes. I do not think that the hon. Lady, despite her criticism of the company, suggested that we should do so.
Inevitably, companies sometimes have to adjust or rationalise their structure, employment levels or product lines because of changing market conditions. As the hon. Lady said, the work force has been cut by almost a third. Redundancies of more than 1,200 have reduced it to about 3,000. A three-day week is being worked and there will be an extended Christmas shut-down at Crewe. I am told that the work force is co-operating in the introduction of flexible working practices. The company is 10 weeks into a complete review of the business and how it can be made more efficient. It believes that those measures will reduce its costs by £640 million, and thus enable it to achieve a break-even point at an output of several hundred cars fewer than previously. One regrets any redundancies, but I am sure that the hon. Lady will accept that, through no fault of the company's the market in the United States has collapsed.
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